Private Equity in Primary Care: Costs, Care, and Impact

Health Affairs Publishing’s Rob Lott speaks to Yashaswini Singh of Brown University about her recent paper that explores how private equity acquisitions in primary care are associated with changes in utilization, spending, and workforce composition.

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Rob Lott: Regular readers of health affairs know that one of

the most significant and complex trends in health care practice

ownership and financing is the increasing role of private

equity. These are firms that buy companies with the short term

aim of increasing their value quickly than selling them for a

profit. The relatively early research about private equity's

impact in healthcare is that it can have significant negative

consequences on the quality of patients' experience and the

care they receive. But there's still a lot we don't know. And

so each new paper on this topic published by Health Affairs and

others represents an opportunity to fill out our picture of the

space to add nuance and understanding of how these firms

may be changing the practices they acquire and how those

changes may affect the health of patients served by those

practices.

One case in point is the latest paper we're discussing on the

podcast today. I'm here with Doctor. Yashaswini Singh, a

health care economist and assistant professor at Brown

University. Together with co authors, she has a new article

in the June issue of Health Affairs describing, quote,

private equity acquisitions and primary care, colon, Changes in

Utilization, Spending, and Workforce. I think this may be

one of the earliest papers to look with this level of

granularity, specifically at the implications for primary care

and its impact on practice patterns.

So we really are moving the field forward here and I'm

thrilled that we can talk about it today. Doctor. Yashaswini

Singh, welcome to our Humble podcast.

Yashaswini Singh: It's a great pleasure to be here. Thank you

so much for having me back.

Rob Lott: Well, so before we dig into your paper, maybe we can

start by having you describe the current scope of private

equity's presence in healthcare today. How significant is

private equity's involvement in primary care specifically?

Yashaswini Singh: Absolutely. That's a great place to start.

You know, the last time we talked about private equity,

mentioned investors have poured about $1,000,000,000,000 in the

American health care system over the last decade or two. Now when

you look at where these funds have flown to, there is

variation across sectors. So in the early 2000s, for example, we

saw investors take a particular interest in hospitals and

nursing homes.

Starting in about 2015, we saw investors shift their focus

towards physician practices, outpatient surgical centers,

ambulatory surgery centers and so on. And then starting in and

around the COVID-nineteen pandemic, even within physician

practices, investors have discovered areas of untapped

potential if you will and primary care is one of them.

We've seen primary care in particular emerge as

particularly attractive to investors starting in about that

twenty nineteen, twenty twenty time horizon. You know, there's

very little we know about how PE plays out in the primary care

setting. Primary care, you know, if we take a step back is also

just fascinating given the wide range disruptions in care

delivery and innovative payment models that we've seen play out

in recent time with concierge medicine, payers taking an

interest in acquiring primary care groups, retail investors

like Amazon and Walmart.

So PE is not the only corporate entity to have taken an interest

in primary care but it's the one that we study in quite detail as

you mentioned in this paper. I think our best estimate before

this study was nationally PE firms have acquired about 2% of

primary care practices, which is quite modest given the scale and

magnitude of hospital consolidation of primary care

practices, for example. But if you look regionally, there are

certain states like Florida, parts, other parts of the

southern part of the country where PE penetration exceeds,

you know, twenty, thirty, 40%. And so we know a little bit

about the scale. We don't know quite enough about its effects

either in terms of how practice patterns evolve or what this

means for patient care until now.

Rob Lott: Got it. Well, I'm glad you're doing the work to dig in

there a little bit. And, let's talk a little bit about your new

paper. You looked at two twenty five private equity acquisitions

of primary care practices during the period from 2016 to 2022.

And you studied the effect of those acquisitions on

utilization, spending, and workforce.

What were some of your top line findings?

Yashaswini Singh: Sure. So we have a couple of findings I'd

like to share with you today. So first, we wanted to understand

what do acquisitions mean for the primary care physicians

practicing at acquired locations. Do they end up

practicing differently? And for that we looked at both the

number of services built by patients as well as the number

of patients seen by physicians.

And we found that physicians both bill additional services as

well as see additional number of patients and so this might be

reflective of productivity pressures or just higher

productivity in general. And we also look to see what these

trends mean for the care that patients receive across a range

of primary care services, immunizations, routine office

visits, preventive screenings, and so on. And we found that not

only do physicians bill for additional services and see

additional patients, but patients themselves also end up

receiving additional services, in particular preventive

screenings, Medicare annual wellness visit, as well as

routine lab tests for specific services that we see a higher

use of on a per patient basis.

Rob Lott: Wow. A lot to take away, from those findings. And I

I think sort of the kind of one of the big picture takeaways

here is that you saw this increase in practice intensity

after acquisition. And I'm curious if you have a sense of

sort of the potential mechanisms that may be leading to the

surge.

Yashaswini Singh: Absolutely. And that's such an important

question because I think in order to make sense of these

findings, we really need to pin down what mechanisms might be

driving them. And so in this study, for listeners, we do

quantify two specific mechanisms, and then we propose

a third that we're not able to look at directly with the data

we have but might also be at play. And so I'll walk us

through what we look at in the study and then I'll share with

you the third one that's in the discussion but again not

formally quantified in the paper. And so, you know, when

you look at finding that suggests, you know, physicians

are billing for more services and maybe more screenings and

ordering more tests for their patients, one concern might be

that maybe they're just seeing sicker patients on average.

And so the higher use is just reflective of a higher need if

your patient panel is more complex. And so we looked at

observable measures of patient risk as defined by the ACC score

and on average we didn't find any changes in patient

composition after acquisition. So we see this as indicating, a

mechanism that perhaps is not at play, which is that, you know,

patients are not getting sicker at practices. And so the higher

use doesn't indicate, necessarily a sicker patient

panel.

Rob Lott: And just to jump in there, the the universe in which

the patient population gets sicker sort of would imply that

the practice is seeking out sicker patients. Is that right?

Yashaswini Singh: That would be one.

Rob Lott: Okay.

Yashaswini Singh: That's correct. Yes. And so the other

mechanism that we wanted to look at and we're very interested in

seeing what the data show is whether practices change the

composition of the clinicians practicing at acquired

locations, right? So in order to build 30% additional services,

are you retaining the same number of physicians and just

having each of them built for additional services or are you

also increasing, the overall available workforce or

clinicians and kind of putting it on the team to bill

additional services. And so we look specifically at both the

number of primary care physicians as well as the number

of advanced practice providers.

And so this latter group comprises nurse practitioners

and physician assistants who increasingly across settings,

not just limited to PE, are playing a greater role in the

delivery of primary care. So we want to understand how workforce

composition changes across these two distinct group of both

physicians and APPs. And we found that physician staff

increased by about 17% after acquisitions, but APPs also

increased by a much larger magnitude by 40% overall. And so

there is this interesting thing we see happen where practices

expand in size, rely perhaps more heavily on advanced

practice providers and nurses and we see that perhaps as one

mechanism that explains the higher use of services. And so,

you know, the higher utilization workload likely is being spread

across larger teams, if you will, that comprises both

physician and non physician staff.

Rob Lott: Well, I want to hear about your third theory, if you

will. But first, let's take a quick break. And we're back. I'm

here with doctor Yashaswini Singh, talking about her new

paper in the June issue of Health Affairs covering private

equity acquisitions in primary care. And just a moment ago, you

described for us sort of two potential mechanisms at play

here in how these acquisitions may be driving increased

practice intensity.

You were able to study those. Then you alluded to a third

theory that may be in the works here and I'd love to hear it.

Yashaswini Singh: Yes, thank you. So the third theory, to

talk about that first, maybe I'll level set a little bit. And

so our study looks at the traditional Medicare population

and one of the key findings that we talked about earlier in our

conversation is the fact that preventive service use increases

after acquisition. Specifically, see a higher uptake of the

Medicare annual visit which is this very interesting preventive

service that Medicare wants practices to get done. It's

distinct from kind of a routine office visit, right?

It's more focused on just a holistic assessment of your

patient. It doesn't necessarily involve any kind of service or

procedure. It's more just kind of taking stock of where the

patient's at when they come see you. Now historically, practices

have had a harder time completing this service because

it is also associated with a lot of paperwork, high

administrative burden. It's very resource intensive in nature.

And so, you know, perhaps it's no surprise that PE investors

with kind of all their muscle and manpower health practices

complete the paperwork needed to do the service and essentially

do what Medicare wants primary care practices to do. So the

surprise mechanism is that this is also considered by experts,

this being the Medicare annual wellness visit and related

preventive screenings, is also considered by experts as sort of

a gateway to increase billing and coding on risk adjusted

payments in the Medicare Advantage setting. You know, we

do look at traditional Medicare and so that's not something we

can directly examine in this paper, but we have other work

that shows PE investors have also targeted primary care

practices that cater specifically to the Medicare

Advantage population and that's where some of these risk

adjusted payments and coding incentives play a larger role.

So what we're unable to rule out is whether the physicians in our

sample also see Medicare Advantage patients and whether

the increase in billing of preventive services and the

Medicare annual wellness visit just reflects sort of a

spillover in practice patterns from the MA population to the

traditional Medicare population. So stay tuned for more work on

that.

You know, it is certainly a plausible mechanism at play, but

one that we do not directly examine in this study.

Rob Lott: Fair enough. Great fodder for future research and

we'll look forward to that. I'm wondering if you could say a

little more about how some of these findings interact with

sort of other trends we're seeing in this space. You

alluded to Medicare Advantage just a moment ago, and we know

that the sort of population of Medicare beneficiaries is over

time shifting more toward Medicare Advantage and away from

traditional Medicare. There's certainly the current

administration's emphasis on prevention writ large and some

of the addition of new codes for practices to bill in that space.

And so I'm curious how you see the increase of PE acquisition

sort of interacting with some of those other factors.

Yashaswini Singh: Yeah, absolutely. It's such a great

question because I think to understand PE in primary care,

we must see it as an intersection of these forces,

right? PE exists partly, in large part, in response to these

forces and so if we look at the shift towards value based care

incentives and, you know, this large administrative workload

that has emerged from that push towards value based care, a lot

of the inflow of PE in primary care has been in response to

independent practices saying they simply cannot keep up with

the crushing demands of paperwork or logistics or

capital intensive investments that participation in these

programs require. I think when we look at MA particularly, it's

a fascinating landscape to understand how corporate actors

are positioning themselves to strategically benefit from the

financial incentives that are distinct to the MA program and

that's where some of the incentives to increase your

billing or coding intensity are more relevant than the

traditional Medicare universe. But I think big picture it's

essential to CPE as sort of a dynamic force that responds to

the market, the regulatory and the financial incentives built

into the American healthcare system and one that will not

only shape the system going forward, but then also kind of

responds directly to it.

So it's kind of a push and pull.

Rob Lott: I also want to ask about sort of the workforce

pathway that you identified you mentioned earlier. Certainly

providers in the sort of these advanced practice nursing roles

and physician assistants are often framed as expanding

access, right? That there's a limit on access and if we could

just, you know, enlist more of these kinds of providers, we

might be able to reach more people with the care that they

need. And so do you have a sense of, you know, is this just about

sort of meeting the demand that there is versus, you know, a

private equity entity finding an avenue to increase revenue? Are

both these things happening at the same time or how do you sort

of extricate the good from the bad?

Yashaswini Singh: Yeah. Another great question. So I my personal

take is that it's a little bit of both. And I think in order to

arrive at that take, have to allow for the possibility of

private investors providing some good. I think, you know, it's

it's difficult given the existing evidence on PE and

facility closures, for example, higher costs tied to

consolidation as another example to even allow for the

possibility that there's some benefit that can be provided by

PE investors.

But I think it's important to be agnostic towards the role that

private capital can play in healthcare and then just let the

data tell the story that it does. And then we see in this

case in primary care, for example, it's not clear that

there's outright harm. Now whether there is evidence of

definitive benefit or expanded access, I'll let the readers

come to their own conclusion. But all of the work that we've

done looking specifically at PE in primary care shows that in

contrast to other settings where there are real documented harms,

the story seems to be a little different in primary care. So,

you know, we must be open to that possibility and then take

that into account in thinking about, whether and how to

regulate or monitor the corporate practice of medicine

more broadly.

Rob Lott: So speaking of regulation and monitoring, to

address the impact of private equity in health care, a lot of

policymakers and researchers have in recent years floated a

number of potential policy interventions. These include

enhanced transaction oversight, transparency about ownership.

And I'm curious how the findings of this paper might further

inform those efforts.

Yashaswini Singh: Yeah, such a great question and the right

time to be asking that question too, right? Just in this current

legislative session across states, we have seen a flurry of

proposals introduced, debated across red and blue states

trying to understand whether and how states will regulate PE in

their own local markets. We've also seen, I believe believe

just last month, a federal bill introduced that proposes to ban

private equity from investing in hospitals and nursing homes

outright. And so there's a lot of interest which might be an

understatement. And there's also a wide range of approaches that

we have seen both federal and state policymakers taken in

regulating PE.

I think the findings of our study, I personally think should

or I hope will help us consider just allowing for the potential

of investors to deliver some benefit, whether it's in the

form of expanded access or increased use of preventive

services. Generally, we think of patients being connected to

primary care practices as a good thing. Generally, we think of

higher use of preventive services as being a good thing.

Now whether or not they're capitalizing on other incentives

and other programs, that's kind of an open question. But my hope

is that this evidence provides additional insights that

policymakers and regulators can consider as they debate

questions related to whether banning PE is the right

decision, whether a transparency forward approach is more

prudent.

The trade off with banning PE is, you know, if you believe the

findings in the study, then there's a risk that you might

ban the potentially beneficial in addition to the potentially

harmful. And so that's sort of a, you know, a nuanced

consideration folks must arrive at in deciding what's right for

their state, but at least, you know, allowing for the

possibility of investors to provide some benefit, is what I

hope the study contributes.

Rob Lott: Great. Well, wonderful note to, wrap up on, Doctor.

Yashaswini Singh. Thanks so much for taking the time to chat with

us today. It was a really fascinating conversation about a

really important and interesting paper.

Thank you so much.

Yashaswini Singh: Thank you so much for having me.

Rob Lott: To our listeners, thanks for tuning in. If you

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